Indevus: McCamant's Best Bet

01/16/2004 12:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

The Medical Technology Stock Letter, edited by biotech expert John McCamant, is one of the most interesting-and profitable-newsletters around. The "aggressive model portfolio" rose an astounding 213% in 2003. He says, "We remain bullish on biotech as we head into the new year." Here's his favorite for the coming year.

"We expect 2004 to be an excellent year for Indevus Pharmaceuticals (IDEV   NASDAQ). All eyes are focused on Trospium, the company's lead product candidate, which treats urge incontinence, also referred to as overactive bladder (OAB). OAB is a serious condition and represents an unmet medical need. In 2002, about $900 million was spent on prescriptions for OAB medications, a 20% increase over 2001. By 2007, the US market is expected to grow to about $1.8 billion. Current treatments are lacking, however, either due to their poor side effects and/or their limited effectiveness. Trospium not only seems to have a superior side-effect profile to its competition, but also appears to start working faster. Both of these factors should bode well for marketing.

"We expect Indevus to sign an attractive marketing partnership for Trospium sometime this quarter in which they retain close to half of the US profits. The drug has already been filed for FDA approval, and we expect FDA action by February 28. This is a product which, conservatively, could easily produce a couple hundred million dollars in annual revenues. In sum, with a $300 million market capitalization, a promising product candidate already filed for approval, and an interesting Phase II pipeline behind that, we think that the stock is significantly undervalued at current levels. We expect shareholders to be handsomely rewarded in the year to come. Indevus is a buy under $7.50 with an 18- to 24-month target of $16.

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